Workforce Alignment, Human Resource Scalability, and Small Business Sales Growth

Abstract

This study contributes to the field of strategic human resource management by providing initial insights into the extent to which, and the conditions under which, workforce alignment leads to higher levels of firm performance. Using data collected from the CEOs of 196 small businesses, I develop a measure of workforce alignment and demonstrate that workforce alignment mediates the relationship between high-performance work system use and sales growth. I also show that firms that achieve workforce alignment through either internal scalability or external scalability (but not both) are more likely to obtain high sales growth than firms that achieve workforce alignment though HR stability. Finally, I reveal other circumstances such as involuntary turnover, contract worker use, and market volatility that moderate the relationship between workforce alignment and sales growth in expected and surprising ways.